Say Yes to Small Businesses – Even in U.S. Federal Contracting
“Small businesses are the backbone of our economy and the heart of our communities. These small businesses have been responsible for creating two out of every three net new jobs in the U.S.” according to U.S. Small Business Administration (SBA) administrator, Maria Contreras-Sweet.
One of the programs the SBA implements is the Historically Underutilized Business Zone, or HUBZone, program, which promotes economic development and employment growth in distressed areas by providing access to more federal contracting opportunities. In March 2016, KANAVA was certified by the SBA as a HUBZone company as a result of our office in Sault Ste. Marie, Michigan, where we created four new part-time jobs to support our federal and private sector work.
In addition to the support SBA provides to small businesses, KANAVA’s primary client, the U.S. Agency for International Development (USAID) has an Office of Small and Disadvantaged Business Utilization (OSDBU), headed by Maurcio Vera, advocates for more opportunities for small businesses on USAID-funded projects.
KANAVA participated in two industry conferences in October – one sponsored by the HUBZone Council and one by USAID’s OSDBU. The National HUBZone Conference brought together HUBZone small businesses from across the U.S. to discuss common issues, challenges, and trends even though we span a variety of industries. A series of workshops were held from doing business with federal agencies, to HUBZone compliance strategies, to other government programs available to small businesses. HUBZone companies are certified by the SBA and have the following requirements:
- It must be a small business by SBA standards
- It must be owned and controlled at least 51% by U.S. citizens, or a Community Development Corporation, an agricultural cooperative, or an Indian tribe
- Its principal office must be located within a “Historically Underutilized Business Zone,” which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act
- At least 35% of its employees must reside in a HUBZone.
The HUBZone Council provides information and support for companies and professionals interested in the HUBZone Contracting Program. It strives to contribute to the economic development of disadvantaged communities by reducing unemployment and homelessness by strengthening, improving, and promoting the HUBZone Program and by helping HUBZone-certified companies maximize their success in earning federal contracts. The Council’s membership includes HUBZone-certified small businesses, other small businesses, prime contractors, government agencies, and other organizations interested in the HUBZone Contracting Program.
The HUBZone small business category is the one area that the U.S. government as a whole cannot meet the 3 percent goal of prime contracts and subcontracts. For HUBZone companies working in international development, we face some unique challenges, including:
- The requirement to have 35% of employees living in a HUBZone, while having part of our employees based overseas, where employees can be citizens of other countries and thus not able to live in a designated HUBZone. As a small business, it is financially impossible to continue hiring in the U.S. to maintain the 35% residency requirement. If the overseas employees were not counted in the staff census numbers, there would be more international development small businesses eligible for HUBZone status. Currently, the Small Business Association for International Companies (SBAIC) is advocating for a change in the regulations so that the definition of “employee” excludes those employees residing outside the continental U.S. (OCONUS). This would allow international development companies to maintain their HUBZone certification and be able to compete on USAID-funded projects, while also contributing to local development in the U.S. under the HUBZone program.
- The ability to find potential employees with the type of skills we require who live in HUBZones is difficult. Our option is to not hire the most qualified person, not fill the position, or hire someone who is not qualified.
KANAVA also attended the USAID Africa Missions Small Business Conference held in Johannesburg, South Africa with over 200 participants from U.S. small businesses and representatives from USAID/Washington and the Africa Missions. A wide array of small businesses attended, from those who have been USAID implementing partners for many years to companies who are interested in USAID-funded work, but have not previously worked with the agency.
The conference, the first held overseas, provided an opportunity to interact with USAID staff, other small businesses, as well as with some large businesses who also attended. While participants had to pay the price of a plane ticket to South Africa, we were able to meet with all of the Sub-Saharan Africa Missions, which would not otherwise be possible for a small business. The interaction between U.S. small businesses and USAID Missions is even more critical now as procurements undertaken by Missions are included in the small business subcontracting goals of USAID.
For KANAVA, participating in these types of conference allows us to gain a better understanding of U.S. government agencies, market to potential clients, and develop relationships with other small businesses to discuss best practices/lessons learned and partnering opportunities.